The war in Ukraine has triggered a global cost of living crisis, which is rapidly deteriorating. Prices are going up on all continents but incomes stay the same, or even fall. Consequently, increasing numbers of families are facing poverty and are incapable of paying for basic necessities such as energy supply or food.
It cannot be denied that the UK is also facing a severe cost of living crisis. And, data shows that the poorest families suffer the most serious consequences.
The UN confirmed that saying: ‘The higher price quotations are particularly concerning for countries already struggling with other crises, including conflict, natural disasters, economic conditions or, as it is often the case, some combinations of those.’
Situation of the poorest in the UK
According to the Resolution Foundation, which is an independent UK think tank, inflation for the poorest families has hit double-digits. Moreover, the foundation revealed that ‘The poorest 10% of households spend up to three times more of their family budget on food and energy bills as compared to the wealthiest 10%.’
One of the main factors behind inflation in the UK reaching record highs was the 54% rise in the energy price cap. After the change, energy bills for a typical family increased by £693.
Rising energy bills have greatly contributed to the inflation surge but prices are going up in other sectors too. ‘Food inflation hit 6.7 per cent last month – the highest since 2011 – while durable goods, which have seen global increases in demand, rising by 8.5 per cent in the past year – the second highest level on record’, Resolution Foundation reported.
Government help for the poorest
The UK government is not indifferent to the struggles of the poorest households. To help them pay for essentials, the government launched the £500m Household Support Fund (HSF) last autumn. Under the scheme, the most vulnerable families could receive money to cover the cost of living. Initially, the programme was supposed to last until the end of March but, as the situation did not improve, it was extended to the end of September.
There are, however, certain problems associated with it. While getting a payment under the scheme might help those who urgently have to pay for certain things, it does not help them long-term. Moreover, it has been reported that certain local authorities ran out of funding for applicants way before the announced deadline. Hence, the government has to make sure that enough funds are available at all times for those who need it. And, it should think about solutions that support people over a certain period of time rather than just once.
Uncertain future
As inflation keeps going up, many wonder when the cost of living crisis will end. Sadly, no one can know for sure.
The Bank of England said, ‘We expect inflation in the UK to rise to around 11% this year and to start to slow next year. We expect it to be close to 2% in around two years.’ So, although things are expected to get worse before they get better, there is a glimmer of hope that the situation will gradually start improving.
As for the energy price cap, it is expected to go up again in October. The week reported that ‘Investment firm Cornwall Insight, which previously accurately predicted April’s increase, said the cap will jump by another £629 this winter, reaching £2,600 per year on average for customers on standard default tariffs.’ It added, however, that Cornwall Insights believes the price cap will drop next spring. Still, it is expected to reach slightly more than £2,040 so it would still be higher than the one we are seeing now.
Energy prices becoming so expensive is outside of consumers’ control but a solution that can help them navigate the crisis is to do a price comparison and consider switching suppliers.
UK Petrol Crisis is Getting Worse
In 2021, the UK saw a serious fuel crisis that brought chaos to every industry that relies on logistics. Drivers were panic buying and people were experiencing anxiety thinking about fuel prices. While the situation improved for a while, now the UK is facing another petrol crisis and the situation is only getting worse.
Due to the war in Ukraine, in recent months various European countries, including the UK, have been seeing soaring fuel prices and fuel shortages.
In the UK, ‘fuel prices started rising in February 2022. In April 2022, the UK forecourt cost of petrol topped £1.60 a litre and diesel over £1.70 a litre,’ Fleet Point wrote. The situation got even worse after that, however, towards the end of June, [etrol reached 191.05p a litre.
Such high fuel prices further aggravate the situation of those already struggling to deal with the cost of living crisis.
Protests against high fuel prices
People across the UK are becoming frustrated with the situation.. High fuel prices mean they are spending a significant proportion of their wages just to get to and from work.
This week a protest under the banner ‘Fuel Price Stand Against Tax’ was organised in parts of England and South Wales. Protesters were driving slow-moving convoys on motorways and main roads, causing disruption to regular traffic. Hundreds of lorries, vans, cars, and tractors participated. The goal was to cause delays to road users and draw their attention to the severity of the situation.
In response to the protests, a UK government spokesperson said: ‘While we respect the right to protest, people’s day-to-day lives should not be disrupted, especially on busy motorways where lives are put at risk and resulting traffic delays will only add to fuel use.’
Other European countries also struggling
The UK is not the only country that is seeing high fuel prices. According to findings of the European Commission, ‘in Poland petrol prices have risen 35.57%, well ahead of second place Czech Republic (23.14%) and Lithuania (23.01%) in third.’ In these countries, salaries are also significantly lower than in the UK so people are able to buy much less petrol.
Experts say that this summer Europe can see fuel shortages, especially as summer is the main season of travel and the demand for fuel is rising every week.
Fuel prices are likely to keep going up while, at the same time, there will be less fuel available. It seems, therefore, like the UK and all of Europe have to brace for a challenging few months.